Expansion amongst other things has been high on the agenda for Top Oil this year. Having recently signed deals with two new authorised distributors, the company is committed to developing its brand and maintaining its foothold as a market leader across the fuel sector. John O’Donovan, national reseller manager with Top Oil says the company prides itself on providing a true end-to-end solution from port to pump, to ensure the best quality products for Irish consumers. New partnerships Talking to Fuel Oil News’ Irish correspondent, Aine Faherty, he outlined how the group has concentrated on forming partnerships with/supporting authorised distributors across the country. “The investment we’ve made in the brand over the last 12 months has been very well received,” he explained. Whilst in recent years, Top has seen the industry move away from contracted and branded distributors, the company believes that this has shifted, with distributors now recognising the importance of having a national brand on their fleets and in their depots. “With some uncertainty on how supply lines will develop over the coming years, distributors are re-evaluating their position and this is working in our favour,” adds John. He believes that it’s not just price attracting resellers to the brand, but also the extra support and backup it offers. “The last few years have been difficult for oil distributors, volumes have fallen and there are tighter margins,” he told Fuel Oil News. “Distributors have had to adapt to facilitate lower order sizes, overhead reductions and changing customer credit culture.” Killarney Oil is one of Top Oil’s newest authorised distributors. As a business that has been operating since 1991, it supplies the domestic, commercial and agricultural sectors in the County Kerry tourist town, as well as the hospitality sector – servicing a large number of hotels and B&Bs. According to Asumpta O’Donoghue, who manages Killarney Oil with brother, James, the company chose to partner Top Oil because it is a national brand with a well established network across the country, and in particular, Kerry. “We believe that by being a branded distributor, delivering quality assured products, it gives our customers peace of mind,” she commented. Asumpta also believes that the business support and advice they get from the Top Oil team is an important aspect of the partnership. “They keep us up to date on changes in the industry, stock management, credit, pricing and marketing. Last winter when there were issues with kerosene supply across the country, we were always supplied with product, which was invaluable.” With a clear focus on developing its network of authorised distributors, Top Oil’s latest signing is Doran Oil of Cashel, Co Tipperary, bringing the total number of distributors to 30.

Following the very mild winter of 2011/12, many pundits were predicting that 2013 would see a number of distributors exit the business. Largely due to a winter that extended up until May over which time sales of kerosene rose, this did not happen.

“We have to be careful that consumers are given the correct information,” said David Blevings, spokesman for the Northern Ireland Oil Federation (NIOF), in response to the launch of the Crumlin Oil Club Unrealistic savings “The club’s publication refers to some GB schemes saving participants between three and 6ppl; this maybe the case in GB, but with a highly competitive local market in Northern Ireland, where 275 distributors supply around 500,000 homes, these savings are frankly not realistic. Reviewing the Fuel Oil News Price Totem the actual distributor margin in Northern Ireland is somewhere between 2 and 4ppl – the saving’s just not there. “Many oil clubs are making comparisons based on the £1 plus per litre for a 20-litre oil drum, which includes the drum’s cost. Consumers have moved past buying drums; most households will have procured two or three drums which they use to fill up at the forecourt kerosene pump. Over the last two years, the biggest growth in kerosene has been at the pump; in rural areas the majority of retail sites now sport one.   For emergency use only “The growth in the drum business is a concern; there are clear health & safety issues when carrying kerosene in cars, and there’s potential for environmental contamination from drips/spillages as it’s poured into the household tank. “Small oil drums are for emergency use only. They should provide a small amount of oil – often in an out of hours run out situation – allowing the householder to heat their home until a distributor can visit the next day. They’re not promoted as a method for heating a family home and we continue to discourage consumers from using them, except in an emergency. “We’re convinced that the future for oil consumers is a viable pay as you go system similar to that operated for gas and electricity. Along with OFTEC we continue to lobby minister McCausland to introduce the new technology that has already been developed locally by Kingspan and Carillion.   Prepare ahead for winter – ensure your customers know what payment terms you offer “In this difficult economic period, NIOF is only too aware of the impact increased energy costs have on consumers. We’re not against oil clubs per se, but consumers should be given the correct information on potential savings. “As a responsible industry, numerous products are already offered to help consumers budget for annual fuel requirements. Putting money aside each week into a budget payment scheme such as PayPoint and Council stamp schemes, can deliver all oil requirements over the winter period. Most distributors will accept direct debits and many operate their own savings schemes. These schemes are ideal as the consumer can build up credit and/or budget to buy a more economical amount of oil and control their fuel spend.” Planning ahead of winter, distributors should ensure that customers are frequently reminded as to the options available.

Killybegs – where Donegal has a depot Some lucky decisions and a keen share of the marine and lubricant markets have helped give one distributor a positive outlook in recession, writes Irish correspondent, Aine Faherty. “All markets are contracting but we’re maintaining our own and growing market share where we can,” says Arthur McMahon, managing director of the Letterkenny-based Donegal Oil Company. In the last two years, the company’s lubricants sector has seen growth treble as great strides were made in gaining market share. The marine industry is also an important component with business from the fisheries and exploration industries in both winter and summer. The exploration industry is serviced from the port of Killybegs, where Donegal also has a depot. If oil exploration develops further off the west coast of Ireland – something largely determined by global oil prices – Arthur is hopeful there will be a beneficial knock-on effect on his business. Presently, the company, which was formed by Arthur’s grandfather in 1954, operates in four areas with its core being home heating oil, delivered countywide from Falcarragh to the north and Killybegs in the south. The company also supplies diesel to agricultural, commercial and small retail customers. There are 30 full-time staff and 15 tankers, ranging from mini-tankers to full articulated trucks. Now with his grandfather, father and brother Barry acting as non-executive directors, Arthur is the first McMahon to have a hands on role as managing director. Firmly in the driving seat, he looks to the future with positivity. “When everyone else was getting bigger, we didn’t join them,” he said. He recalls how the company sold two filling stations in 2006 and 2007. “Good business decisions on our part which I would best describe as ‘lucky’ now. Thankfully we’ve no big legacy of debt and we’re happy enough with business, at the moment.” Many of Donegal’s customers and suppliers are, however, under pressure from the banks. “This constitutes a bit of a squeeze on everything and costs are controlled accordingly,” he added.Maintaining a good reputation The Donegal Oil Company has a strong association with Topaz – a brand Arthur says is synonymous with quality. Although cheaper options for oil are available, he believes that people appreciate brands they can trust. Acknowledging the substantial amount of illicit home-heating practices around, with cross-border smuggling and laundering operations in full swing, Arthur admits such activity is “very frustrating” for legitimate players. To remain disassociated with such practices and to keep reputation intact, the company supplies a number of small rural filling stations on an on-going basis. “This needs to be all or nothing. We’re not willing to share business,” he says explaining that if its brand were to be seen at a station which was also being supplied in the middle of the night by another lorry, this would have a detrimental effect on business. “A good reputation in business is next to impossible to claw back.”

Celebrating 20 years in business, Jerry Cosgrave and Leon Byrne beside McConville Oil’s tanker McConville Oil is run by Jerry Cosgrave who took over the business from his father-in-law Dermot McConville eight years ago in what was a very different operating time “It was push, push, sell, sell and no-one worried about credit,” he says. In such busy times Jerry could have put another tanker on the road but now he is very glad that he did not opt for expansion. “I would be carrying significantly more overheads in a market where volumes have almost halved and there is little or no consumer confidence,” he told Irish correspondent, Aine Faherty. McConville Oil operates just one tanker bought in 2007, which Jerry drives in addition to taking all the orders on the road, backed up by Leon Byrne, a part-time administrator in the office. In operation for 12 years, prior to Jerry’s acquisition McConville Oil had developed a reputation for reliability so he retained the name and secured a contract with Top Oil. The bulk of business is done within a 12-mile radius of its Graiguenamanagh base in Co Kilkenny where domestic home heating oil is the main seller throughout the winter months. Over summer where once there was some road diesel business from construction accounts, Jerry now relies solely on the farming industry and might just work on the basis of a three-day week spread over five or six days. Although rewards are not massive, Dermot reports a good living which he is very happy with. A few years ago tanks were installed in the yard and investment was made in a bottom loading skid. Now, while there are no capital spending projects in the pipeline, it is hoped that temperature compensation probes will be installed in his lorry before September. At a cost of €700 to fit, it could give a saving of €4,000 to €5,000 per year. In the future, Jerry also hopes to utilise a mobile fuel management system if a cost effective solution for the small operator is available; presently outlay for software would not be feasible. Since January, like all oil distributors, he has adhered to strict revenue reporting guidelines on the movement of oil. Initially quite a challenge, Jerry now says that despite the extra paperwork involved, it enables him to keep a tighter control on stock movements. He does, however, remain to be convinced that this will meet its intended purpose, to grind fuel laundering practices to a halt. As many quit giving people credit, Jerry still extends credit to his oldest customers as a form of goodwill for their continued custom. Burned by big players, he has entered into payback plans; one owing a large sum is repaying at the rate of €100 per month. “It’s better than fighting with them,” he says. Jerry feels the future of oil is fairly secure, “especially in rural areas where gas is still not an option. Unless it becomes much more expensive, which I think is unlikely. “Most people would revert back to oil if it cost €1000 for 600 to 700 litres, which is about 20% cheaper than it currently is in Ireland. “And I think it could happen,” he says optimistically.

Managing director, Jordan Ingoe, shows off the company’s new 14,000 litre tanker. Photo supplied by Jonathan Farber Rochdale-based Ingoe Oils attracted new business at the Cheshire Show last month.

Irish correspondent Aine Faherty with David Blevings, Northern Ireland Oil Federation at the recent Fuel Oil News Distributor Debate held in Templepatrick in March The number of operators selling washed diesel and taking business from legitimate dealers continues to affect the industry The low rate of convictions in Northern Ireland was recently raised by politician and TUV leader Jim Allister, where there have been just 17 convictions in the last four years, with little or no fines and prison sentencing imposed. “This gives out all the wrong signals to the perpetrators,” said a Craigavon-based distributor. “Laundering fuel is the equivalent of stealing, and it damages vehicles, so it should carry a heavy penalty. As soon as one place is closed down, within a short time the same operators are carrying on regardless from a different, albeit close location.” The distributor, who wished to remain anonymous, was unaware that penalties were so low. At the Northern Ireland Oil Federation, the message is clear. “If there’s known fuel abuse in an area, it impacts on business. It’s in everyone’s interest to report it and tackle the situation. After all, this fuel abuse is a real threat to legitimate business and damages the industry’s reputation.”The need to keep one step ahead with a more robust fuel marker Most recently published figures by HM Revenue and Customs (HMRC) indicate that within the last year, officers dismantled 24 laundering plants and arrested 7 individuals for fuel fraud offences. “We’re not complacent and appreciate the need to keep one step ahead of fuel launderers,” commented an HMRC spokesperson. “Consequently, the search for an even more robust marker capable of foiling 21st century fuel launderers is essential to ensure that opportunities for fraudsters to exploit fuel supplies are reduced and illicit fuel can be detected.” In a joint initiative between the Republic of Ireland and the UK submissions for a new fuel marker suitable for use in both jurisdictions have been invited. “HMRC is responsible for investigating suspected excise fraud and reporting cases to the public prosecution service.  When we detect those engaged in the illicit supply chain or commercial scale misuse of fuel, we also have a range of sanctions at our disposal. These range from seizure of assets, civil recovery of taxes evaded to prosecution. Sentencing is a matter for the judiciary; a review of which is being carried out by the lord chief justice.”